What is double taxation? How to avoid?

Every company needs attention to the financial and tax sectors. They are responsible for paying taxes and other fees that ensure the legal performance of the business. Carelessness with these areas can have serious financial consequences and harm the company's fiscal management. It is an event in which the same taxable event is taxed twice by two different entities. In other words, it happens when the taxpayer is charged twice, in a wrong and unfair manner, by different entities. This process only happens when there is a conflict in the application of these taxes, since each federative entity has separate responsibilities. When a charge is made twice, a federative entity invades the tax jurisdiction of the other.


When is double taxation allowed?

Generally speaking, double taxation is not allowed, but there are exceptions. It can happen in cases where there is a national emergency, such as a war. And also when the entities involved are from different countries. In the latter, we call it international double taxation, which happens quite frequently.

How to avoid double taxation?

The first tip to avoid double taxation is to be careful with the company's tax management. Attention: although double charging is illegal, you should not fail to pay.  After all, this action generates the so-called tax evasion - which is one of the most famous crimes, and may even lead the taxpayer to prison. Tax evasion occurs when an individual or legal entity fails to pay any tax or does not correctly report their earnings so that the tax is reduced. Considering that double taxation can happen in several situations, it is necessary to double the attention to avoid it.

Perform tax planning

We always mention taxes for independent contractors that wish to have control and organization of all obligations to maintain the health of the business. Through this strategy, the company is able to carry out correct accounting practices, which favors the advantages in paying taxes. It is with tax planning that the taxpayer is able to follow changes in legislation, the creation of new taxes and all the news on the subject.

Rely on trained specialists

Trained professionals are the key to avoid double taxation and ensure the company's financial health. They understand tax issues and manage the main problems. Therefore, they are the most suitable to take care of tax management, after all, they are specialists. Remember, however, to always keep the team in training and constantly updating.

Pay attention to tax compliance

Tax compliance allows the company to act in accordance with all rules, especially with regard to the payment of taxes and compliance with laws. Internal inspection increases through compliance and there is a guarantee that taxes are paid on time, in compliance with governance methods.